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Concept Introduction:
Fair value of Securities:
When an investment is purchased, it is required to revalue the investment at the end of the year in order to make sure the fair value is correctly reflected in the financial statements.
Fair value refers to the realizable value of the securities at the end of a reporting period. It can be viewed as the replacement cost of the securities if such securities were purchased today.
If the cost of purchase is higher than the fair value of the investment at the time of revaluation, then the difference is debited to the fair value adjustments account.
If the cost of purchase is lower than the fair value of the investment at the time of revaluation, then the difference is debited to the fair value adjustments account.
Requirement 1:
Cost basis compared to previous years amount
Concept Introduction:
Long term Investments:
Long term investments are made by corporations in several avenues, such as Mutual funds, Government securities such as bonds, and commercial papers, Mortgage and Asset backed securities such as Real Estate Funds etc.
They represent steady income for the investor in the form of periodic interest payments or capital appreciation of the value of the investment.
They are often purchased are issued at par (at face value), at premium (at higher than face value) or at a discount (at lower than face value).
Requirement 2:
8 Types of investments held by Microsoft for the year ended 30 June, 2016.
Concept Introduction:
Fair value of Securities:
When an investment is purchased, it is required to revalue the investment at the end of the year in order to make sure the fair value is correctly reflected in the financial statements.
Fair value refers to the realizable value of the securities at the end of a reporting period. It can be viewed as the replacement cost of the securities if such securities were purchased today.
If the cost of purchase is higher than the fair value of the investment at the time of revaluation, then the difference is debited to the fair value adjustments account.
If the cost of purchase is lower than the fair value of the investment at the time of revaluation, then the difference is debited to the fair value adjustments account.
Requirement 3:
Unrealized gains and losses of Microsoft for the year ended 30 June, 2016.
Concept Introduction:
Fair value of Securities:
When an investment is purchased, it is required to revalue the investment at the end of the year in order to make sure the fair value is correctly reflected in the financial statements.
Fair value refers to the realizable value of the securities at the end of a reporting period. It can be viewed as the replacement cost of the securities if such securities were purchased today.
If the cost of purchase is higher than the fair value of the investment at the time of revaluation, then the difference is debited to the fair value adjustments account.
If the cost of purchase is lower than the fair value of the investment at the time of revaluation, then the difference is debited to the fair value adjustments account.
Requirement 4:
Cost basis compared to recorded amount for the year ended 30 June, 2016.
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Chapter 15 Solutions
FUND.ACCT.PRINC.(LL) 25E <C> W/ CONNECT
- Please make a trial balance, adjusted trial balance, Income statement. end balance ,owners equity statement, Balance sheet , Cash flow statement ,Cash end balancearrow_forwardActivity Based Costing - practice problem Fontillas Instrument, Inc. manufactures two products: missile range instruments and space pressure gauges. During April, 50 range instruments and 300 pressure gauges were produced, and overhead costs of $89,500 were estimated. An analysis of estimated overhead costs reveals the following activities. Activities 1. Materials handling 2. Machine setups Cost Drivers Number of requisitions Number of setups Total cost $35,000 27,500 3. Quality inspections Number of inspections 27,000 $89.500 The cost driver volume for each product was as follows: Cost Drivers Instruments Gauge Total Number of requisitions 400 600 1,000 Number of setups 200 300 500 Number of inspections 200 400 600 Insructions (a) Determine the overhead rate for each activity. (b) Assign the manufacturing overhead costs for April to the two products using activity-based costing.arrow_forwardBodhi Company has three cost pools and two doggie products (leashes and collars). The activity cost pool of ordering has the cost drive of purchase orders. The activity cost pool of assembly has a cost driver of parts. The activity cost pool of supervising has the cost driver of labor hours. The accumulated data relative to those cost drivers is as follows: Expected Use of Estimated Cost Drivers by Product Cost Drivers Overhead Leashes Collars Purchase orders $260,000 70,000 60,000 Parts 400,000 300,000 500,000 Labor hours 300,000 15,000 10,000 $960,000 Instructions: (a) Compute the activity-based overhead rates. (b) Compute the costs assigned to leashes and collars for each activity cost pool. (c) Compute the total costs assigned to each product.arrow_forward
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